daily reckoning update..., page-20

AFR p.9
Ferguson puts jobs before carbon scheme.
Federal resouces and Energy Minister Martin Ferguson warned on Friday he would not support the carbon emissions trading scheme if it risked sending too many jobs offshore.
Mr Ferguson, in Bangkok to attend a meeting of energy ministers of ASEAN said the development of an ETSwould have to take account of what other nations were doing to control carbon emissions and also the health of the Australian economy.

He said the govt was trying to strike a balance between being "environmentally responsible but economically smart".

"We've got to work out the balance, which means we have an impact but we don't see carbon leakage, which means we are pure but all our jobs go offshore." he said. "That's something that neither I nor the great majority of cabinet will sign up to."

The govts controversial ETS has been hotly debated since the release of its climate change paper last month. There has been criticism that a model to reduce carbon emissions based on prod'n rather than consumption will hurt ndustries competetiveness and prod'n will sift o/s, taking 1000s of jobs with it.

AngloGold Ashanti, the worlds 3rd largest gold producer, has warned that development of its Tropicana gold project in WA could be threatened by the introduction of the ETS proposed for 2010.

Mr Ferguson said the economic shake up from the introduction would be greater than under previous govts when they reduced tariffs, floated the dollar and changed industrial relations laws.

"That was a cakewalk compared to the process we are involved in at the moment." he said. "The evolvement of a carbon pollution reduction scheme is real hard. This is the most fundamental restructuring of the Australian economy that any generation has ever confronted."

Through an ETS, the government will cap the amount of carbon pollution industry can produce, and sell permits up to that limit. Companies are entitled to buy and sell permits, allowing the market to find an efficient solution for reducing pollution. About 1000 large companies are expected to participate in an ETS.

The cost to industry for the permits will depend on the number of permits issued and the price the govt charges for them. ANZ Economics estimates that if permits were priced @ $20 a tonne, the cost to industry could total $8.9billion.

This cost estimate is based on industry buying enough permits to cover emissions produced in 2006. The $8.9billion cost is equivalent to just less than 1% of GDP in 2007.